A chief constable was forced to apologise today after the prosecution of Hyde Park bombing suspect John Downey collapsed due to a "monumental" blunder by his force.

Convicted IRA member Downey, 62, of County Donegal, received a "letter of assurance" from police in Northern Ireland in 2007 when there was an outstanding warrant against him.

Despite regularly travelling to the UK and Northern Ireland since then, last May he was arrested at Gatwick Airport en route to Greece and charged. He "strenuously" denied the murder of four British soldiers and causing an explosion.

The judge, Mr Justice Sweeney, threw the case out after Downey's lawyer successfully argued at the 11th hour that the defendant should not go on trial at the Old Bailey. Today, the Crown announced that it would not appeal against the decision.

At an earlier hearing, Henry Blaxland QC warned of the political ramifications in Northern Ireland of pursuing a trial against Downey in such circumstances, saying the false assurance he received was "not just negligent, it was downright reckless".

In his judgment, Mr Justice Sweeney said there were "very particular circumstances" of the case. The public interest in prosecution was "very significantly outweighed" by the public interest in ensuring that "executive misconduct does not disrepute" , and in "holding officials of the state to promises they have made in the full understanding of what is involved in the bargain".

The legal wrangle raised questions with the Police Service of Northern Ireland which, the court heard, knew about the UK arrest warrant for Downey but did nothing to correct the error of 2007.

Afterwards, relatives of the four soldiers said in a statement: "It is with great sadness and bitter disappointment that we have received the full and detailed judgment and that a trial will now not take place.

"This news has left us all feeling devastatingly let down, even more so when the monumental blunder behind this judgment lies at the feet of the Police Service of Northern Ireland (PSNI).

Northern Ireland chief constable Matt Baggott apologised to the families, saying: " I deeply regret these failings, which should not have happened."

He said checks were under way on information processed by the force about other similar cases.

Northern Ireland Secretary Theresa Villiers said police in Northern Ireland should reflect on "the serious error".

President of the Association of Chief Police Officers Sir Hugh Orde, who was chief constable of Northern Ireland at the time of the error, said: "It is a matter of great personal regret that a crucial oversight was made by a senior officer which resulted in erroneous information being sent to Mr Downey by the Northern Ireland Office and thus prejudicing the current indictment."

Announcing that the Crown would not appeal, prosecutor Brian Altman QC acknowledged the pain of the victims' families "who must live with the consequences of it daily, and with the memories of that dreadful event".

On July 20 1982, a car bomb left in South Carriage Drive killed the soldiers as they rode through Hyde Park in central London to the changing of the guard.

The explosion killed Roy Bright, Dennis Daly, Simon Tipper and Jeffrey Young and injured other members of the Royal Household Cavalry. Seven horses were killed as the soldiers travelled from their barracks to Buckingham Palace. Another horse, Sefton, survived terrible injuries and became a national hero.

The investigation into the bombing led police to Downey, through fingerprints on parking tickets and a description given by witnesses of two men carrying out reconnaissance in the area before the attack.

An arrest warrant was issued, but it was decided not to seek Downey's extradition from the Irish Republic in 1989, in part due to the lack of strong evidence against him, the court was told.

Then in 2007, Downey received assurance he was not at risk of prosecution as part of a scheme run by the Northern Ireland police.

He was one of 187 "on the runs" (OTRs) to seek clarification from the authorities in the wake of the Good Friday Agreement.

Mr Blaxland said: "Sinn Fein impresses it is impossible to overstate the importance of the assurances given to the 187 people."

Warning of the political fallout if a trial should go ahead, Mr Blaxland said: "Once the trust starts to break down, the whole edifice starts to crumble."

The court heard that Downey had been heavily involved in the peace process long before the Good Friday Agreement and had even given up his oyster farm to work on it full-time.

The court was told by Downey's legal team that there were other factors, aside from the clerical error, that meant he should not face trial.

These included the length of time - more than 30 years - since the offence, as well as the commitment in 2001 not to pursue those who might benefit from early release schemes.

In his judgment, Mr Justice Sweeney only upheld the argument that the letter of assurance and the failure to correct it amounted to an abuse of process.

A statement from the Metropolitan Police said the force "respects the decision of the court" and the investigation "remains open".